Thousands of Stores Recently Closed: What Went Wrong and How Can Retailers Avoid Being Part of This Growing Trend?
To say 2017 was a rough year for retail would be an enormous understatement. According to CNN, a record 7,000 brick-and-mortar store locations closed for good last year. And this list included plenty of familiar names like Payless ShoeSource, Gymboree, Rue 21, RadioShack and The Limited.
Unfortunately, there appears to be no end in sight for this rough patch for retail. Toys “R” Us recently announced it was closing about 180 stores across the United States to restructure $5 billion in debt. When studying this phenomenon, it’s important to examine where some of these companies went wrong, as well as how retailers can avoid being next on the chopping block.
Why There Were a Record Number of Closings
Brick-and-mortar stores are still turning a profit — at least to some degree. But not all retailers that rely primarily on permanent storefronts are experiencing the same level of success. In fact, two key reasons why so many retailers are closing their doors are market oversaturation and the rise of e-commerce businesses, according to The Wall Street Journal.
More specifically, the buildout of brick-and-mortar retail locations began almost 30 years ago, when retailers raced to open as many locations as possible. Thousands of new storefronts opened, and eventually, monthly rents increased, creating a retail bubble that has now burst. As retailers strove to open as many brick-and-mortar locations as possible, the internet was revving up and quickly eliminating what little pricing power these chains once had.
Furthermore, because it’s now so easy for consumers to comparison shop online, many retailers have even less pricing power than before. In addition to offering lower prices, e-commerce businesses also provide busy people with an easy way to shop. Plus, add in free shipping and returns and many shoppers are less inclined to head to a physical storefront for what they need.
How Retailers Can Avoid Being Next
Despite all this, one way that retailers can avoid being part of these grim statistics is by focusing more on providing top-notch customer service. For example, business owners may want to look into implementing a contact center in the cloud to enhance their customer service experience and set them apart from the competition.
In particular, cloud contact centers staff skilled live agents, who are able to quickly and efficiently answer customers’ questions related to a product or service, as well as resolve disputes and confirm orders. As a bonus, by implementing this technology, busy store owners will inevitably spend less time on the phone and instead focus on more pressing business matters.
Of course, businesses can rely on both brick-and-mortar and e-commerce to experience success. This way, customers who prefer to buy products from the comfort of home can still spend money at their favorite retailer, while those who prefer an in-store shopping experience can get their fix, too.
Despite the Challenges, Retail Will Survive
The statistics may be discouraging right now, but retailers that rely and depend on permanent storefronts aren’t doomed to failure. By understanding why brick-and-mortar storefronts are becoming less popular — and providing top-notch customer service combined with an easy online shopping experience — retailers will not only survive but also thrive in 2018 and beyond.